C04 - Mitigating trade-offs between economic and ecological functions and services through certification

This project will pursue two aims. One is to extend the analysis of carbon footprints of households in Indonesia. In the first phase, the consumption-based carbon footprints of households and their determinants were analysed for the sample of households at the rainforest margin in Sulawesi, for households producing rubber and palm oil in Jambi, and for a representative national sample for several
time periods. In the second phase we will extend the analysis and also integrate the production side. In particular, we will combine household survey information on oil palm and rubber production with data on and analysis of carbon stocks as well as CO2 emissions associated with different land-use systems including crop choices and management systems. On the basis of this complete account of the carbon footprint of agricultural households the project will then provide a detailed empirical assessment of the heterogeneity in the relationships between carbon footprints, production, consumption, and household welfare in Jambi.
The second aim of the project is to evaluate the possible contribution of palm oil certification to mitigating the trade-offs between production and income, on the one hand, and, ecological functions, on the other. We plan to focus on a certification scheme that is currently implemented by the Indonesian government, the so-called ISPO (Indonesian Sustainable Palm Oil) certification standard. This standard has become mandatory for plantations as of 2014 and will also be mandatory for smallholders by 2020. The impact evaluation will start with a qualitative assessment on the precise modalities of the scheme both de jure and in terms of the de facto implementation in Jambi. This will also include a comparison with other standards, in particular those of the RSPO (Roundtable for Sustainable Palm Oil), an international and more ambitious (and more costly) certification scheme that is also being implemented by some producers in Jambi. Based on the first assessment of the ISPO and RSPO modalities, we will again combine household survey data and ecological information to compare socioeconomic and ecological outcomes under different regimes (certified under ISPO (RSPO), noncertified). To minimize bias in the impact estimation due to unobservable characteristics, we propose a pipeline and matched double-difference approach with binary and continuous treatment. We intend to include a randomized phase-in by villages or groups of farmers subject to practical feasibility.

Farewell lecture by development economist Prof. Stephan Klasen, Ph.D. .